March 13, 2023 at 12:38 p.m.
Discover becomes first credit card issuer to track guns
But all major credit card companies are not far behind
Discover Financial Service, which is the card issuer, recently told Reuters news agency it will employ the new code starting in April. Put simply, the code will be attached to any transaction in a gun or ammunition store and will record that the card user made a purchase at a particular gun store, as well as the amount of the purchase.
The move makes Discover the first major credit card company to actually use the code, though Visa, Mastercard, and American Express are all said to be not far behind. In a statement last September, Visa indicated it would follow through with deploying the code, though it was firmly against its misuse to track the purchases of its customers.
"We do not believe private companies should serve as moral arbiters," Visa said in a statement. "Asking private companies to decide what legal products or services can or cannot be bought and from what store sets a dangerous precedent. Further, it would be an invasion of consumers' privacy for banks and payment networks to know each of our most personal purchasing habits. Visa is firmly against this."
That said, the company said the code would go forward.
"As we do when ISO (International Organization for Standardization) creates a new merchant code, Visa adopts the standards that apply to our industry," the company stated. "For us, that means working with our financial institution clients to enable them to implement this new MCC (merchant category code) when ISO makes it available."
The move is being opposed by conservatives but hailed by progressives, though even some progressives say the code is flawed because it tracks purchases by retail store, not by what is bought.
Nonetheless Democrats were generally happy last year when the new code was announced.
"Everyone has a role to play in the fight against gun violence," New York Gov. Kathy Hochul, a Democrat, said. "The creation of a new merchant category code for firearms is a major step forward that will help give law enforcement the tools they need to stop a tragedy before it happens. I'm grateful to the business leaders who stepped up and joined the fight to protect public safety - here in New York and across the nation. Together we can stop gun trafficking and keep New Yorkers safe."
New York attorney general Letitia James was likewise supportive.
"Today's decision requiring credit cards to categorize gun sales is a big victory that will help us better address gun violence and avoid tragedies," James said. "Labeling gun and ammunition sales is a responsible, common sense way to help protect Americans. I urge credit card companies to take the next step and flag suspicious transactions on gun and ammunition sales, like they do for fraud and money laundering."
Republicans begged to differ. GOP U.S. Rep. Lauren Boebert of Colorado said the move demanded urgent action from Congress.
"This is a massive problem Congress needs to address, immediately," Boebert tweeted.
The NRA has weighed in, too, saying the separate categorization for gun store owners was yet another attempt to create a federal gun registry.
"Several provisions in federal law, but most notably a key part of the Firearm Owners Protection Act of 1986, prohibit the federal government from centralizing most firearm records into a registry," the group stated. "The new MCC could provide a way for the government to outsource the creation of a registry that the government itself is prohibited from creating. If banks and payment processors share their records with the government, that would be a major step towards the registration of all gun owners in America."
The NRA also says the code could give anti-gun groups a tool to use in their campaign against lawful businesses.
"The groups claim that they expect banks and payment processors to 'flag' so-called 'suspicious' transactions with the new MCC," the NRA stated. "Notably, no standards are given for what would be considered 'suspicious.' And, since the proponents of the new MCC consider the desire of any American to exercise their Second Amendment rights suspicious, it's unlikely whatever standard is developed will be done so in good faith."
How it came to be
Discover's announcement that it would use the code came after a subcommittee of the ISO gave the approval. The actual impetus came from a petition by Amalgamated Bank, which applied to the ISO for the code.
Amalgamated Bank officials say the code is key to creating new tools that financial institutions can use to begin detecting and reporting suspicious activity associated with gun trafficking and mass shootings to the Financial Crimes Enforcement Network, the government agency charged with safeguarding the financial system from illicit use.
"We all have to do our part to stop gun violence," said Priscilla Sims Brown, president and CEO of Amalgamated Bank. "And it sometimes starts with illegal purchases of guns and ammunition. The new code will allow us to fully comply with our duty to report suspicious activity and illegal gun sales to authorities without blocking or impeding legal gun sales. This action answers the call of millions of Americans who want safety from gun violence and we are proud to have led the broad coalition of advocates, shareholders, and elected officials that achieved this historic outcome."
Amalgamated Bank said it took almost three years of research and partnership with issue experts at Guns Down America and the Giffords Law Center - two pro-gun control groups - to make the code happen, as well as broad support from elected officials, pension funds, and others.
Adam Skaggs, chief counsel and policy director at the Giffords Law Center to Prevent Gun Violence, characterized gun violence as an epidemic that requires that no stone be left unturned in seeking to save lives.
"We therefore commend Amalgamated Bank for its courageous leadership in demonstrating that the financial industry, too, has a part to play," Skaggs said. "Creating a dedicated merchant category code for gun sales is only the first step, though, and we look forward to working with Visa, Mastercard, and American Express to ensure swift efforts to ensure uniform and comprehensive use of this new code."
Igor Volsky, the founder and executive director of Guns Down America, said the financial sector had finally stopped stalling and had come to understand the problem, which he said is that credit card purchases have consistently been involved in some of the nation's worst mass shootings.
"Credit card companies have rules to stop fraud and human trafficking," Volsky said. "This common-sense decision means the same rules will apply to guns, making it easier to stop illegal firearms-related activity. We will now work to make sure the credit card companies implement these new changes without delay."
Kris Brown, president of the Brady Center to Prevent Gun Violence, said the new MCC was a small change that would help identify illegal or suspicious activity to stop shootings before they happen and save lives.
"We call on financial institutions to work with us to institute these new changes," Brown said.
But the NRA says Discover has not explained just how the company will determine which purchases are sufficiently "suspicious" to warrant reporting or what information, if any, customers will be provided when they have triggered an alert.
"Use of the MCC can only inform a credit card company that a certain amount of money was spent at what is considered a firearm retailer," the NRA states. "It cannot be used to track what was actually bought, much less determine why the purchase was made. Thus, the program inherently poses a risk to consumers of needlessly intrusive and harassing consequences for completely lawful and innocent conduct."
In addition, the NRA says it doubts that a typical credit card executive has sufficient knowledge or experience with firearms and gun shops to have any concept of what is and is not within "normal" bounds.
"That would be like asking a plumber from Nebraska to judge whether a Wall Street financier spent a 'reasonable' amount of money on cigars or in a luxury day spa at Lake Tahoe or Monaco," the NRA stated.
The NRA statement also cast doubt on Discover's claim that it was merely "following th[e] lead" of other credit card issuers that "had already decided to implement the new code in April."
"No such company, however, would admit as much to Reuters," the NRA stated. "It may be that as the credit card industry takes a closer look at operationalizing the scheme, executives will understand it is unworkable, unwise, and eminently un-American."
According to the NRA, they expect anti-gun groups to use the new flagging system to create liability for banks or payment processors who do business with the firearm industry.
"When a firearm is used in a high-profile crime, these groups will now also sue any bank or payment processor that facilitated any transfer of the firearm and claim that these financial institutions didn't do enough to stop the gun from falling into the wrong hands," the NRA stated. "The inevitable goal of such a campaign is to convince banks and payment processors to stop dealing with the firearm industry entirely by claiming that it is 'too risky' of an industry to be involved with. In this case, that 'risk' is being manufactured by the creation of the new MCC."
The NRA points out that the ISO codes are not mandatory for payment processors to adopt, and that it is working with lawmakers to prevent or reduce implementation of the new MCC.
State legislation
One way implementation could be slowed is through state legislation that bans retail merchants from using the code. Such legislation is now being proposed in about a dozen states.
In Florida, Republican state Sen. Danny Burgess and Republican state Rep. John Snyder have proposed legislation to prohibit the collection of Floridians' financial data from firearm and ammunition purchases. Florida commissioner of agriculture Wilton Simpson helped develop the legislation.
The "Florida Arms and Ammo Act" is aimed at prohibiting financial institutions from collecting and monitoring information on Floridians' firearm and ammunition purchases through the use of the code. The bill's sponsors contend that the new MCC would create a quasi-registry of Floridians who have legally purchased guns or ammunition.
"We are all blessed to live in the free state of Florida where our Second Amendment rights are valued and protected, but Democrats in Washington continue to try to chip away at these rights - and we must stay vigilant," Simpson said. "The 'Florida Arms and Ammo Act' draws a line in the sand and tells multinational progressive financial institutions, and their allies in Washington, that they cannot covertly create a backdoor firearm registry of Floridians - or else."
Burgess said no one in the U.S. should be penalized for exercising a constitutional right.
"The Second Amendment is nonnegotiable, and here in Florida, we are going to fight to protect the rights of Floridians," Burgess said.
Snyder added that the state of Florida would not allow financial institutions to target gun owners and that the bill would prevent the creation of a comprehensive database of law-abiding Floridians.
Under the bill, credit-card companies could be fined up to $10,000 per violation for tracking firearm and ammunition sales through the code. A Senate committee approved the measure last week.
Florida is not the only state with legislation pending. Similar bills have been introduced in Texas, Florida, Mississippi, Oklahoma, West Virginia, Wyoming, among others.
Richard Moore is the author of "Dark State" and may be reached at richardd3d.substack.com.
Comments:
You must login to comment.